Chapter 4 Flashcards
Investment, as defined by economists, would not include which of the following? Ford
Buying us bonds
Legalizing all forms of illegal activities
increases GDP and reduces the size of the underground economy.
If nominal GDP is $5 trillion and real GDP is $4 trillion, the GDP deflator is
125
If the GDP deflator rises from 185 to 190, what is the rate of inflation between the two years?
2.7%
The output of Mexican citizens who work in Texas would be included in the
GNP of mexico
Depreciation is
the value of worn-out equipment, machinery, and buildings.
Which of the following transactions represents the purchase of a final good?
Your father buys a new John Deere riding lawn mower.
The value of goods added to a firm’s inventory in a certain year is treated as
investment, since GDP aims to measure the value of the economy’s production that year.
Which of the following items is the one type of household expenditure that is categorized as investment rather than consumption?
The purchase of a new house
Because every transaction has a buyer and a seller,
every transaction contributes equally to an economy’s income and to its expenditure.
Joe and Bob purchase oranges at a grocery store, but Bob also grows oranges in his backyard. Regarding these two practices, which of the following statements is correct?
Only Joe’s and Bob’s grocery store purchases are included in GDP.
Most goods and services produced at home
and most goods and services produced illegally are excluded from GDP.
Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has
increased measured GDP by the value added by the restaurant’s preparation and serving of the meals.
Which of the following is included in the calculation of GDP?
The purchase of tutoring services from a tutor who holds citizenship outside the country but resides within the country.
